Now Jen is on a mission to inspire and empower others through financial education so they too can enjoy the life they want to live. Jen shares her recipe for success, happiness and financial freedom via writing, blogging, speaking and coaching. As part of her commitment to community, Jen pledges her blogging profits as 0% microloans through Kiva.org to small businesses operated by working, impoverished women in developing countries.

Category: Economy

How do we learn about money? 80% of parents surveyed believe that schools provide classes for their children on money management and budgeting.

Sorry to break the bad news, Mom and Dad — your kiddos probably aren’t learning personal finance in school. Our school system requires English, math and science, but not a practical life-skills class like financial literacy. Ridiculous, isn’t it? I am all in favor of a well-rounded education, but what good is it if students learn where Shakespeare was born, but not what a tax-deferred retirement plan is? Or that n2 = x, but not that if you use Payday loans, you could pay an outrageous 1560% in annual interest!

Once we graduate from high school, the vast majority of us are responsible for earning an income, establishing and maintaining a respectable credit score, balancing our bank account, and saving for our future. We deal with money decisions almost daily — yet we are taught nothing about personal finance in school.

Braun Mincher (Braun Media, LLC) is currently producing a feature-length documentary film which exposes the financial illiteracy epidemic in order to bring awareness to this important topic. Braun’s goal is to show viewers why taking personal responsibility for their own financial wellbeing is so important. He wants to expose how little parents and the school system are doing to prepare the next generation for this growingly complex and relevant topic.

Braun conducted over 100 interviews with a wide variety of people: students, parents, educators, consumers, government officials, celebrities and personal finance experts. I was honored to be one of his interviewees. Here’s a short video teaser clip of my own money-life story and response to his million dollar question: “If financial literacy education is so important, then why are we not requiring schools to teach the subject, especially considering the current economic situation?”

Incidentally, I think it’s supposed to look like I’m sitting at my desk but the office I was interviewed in is not mine — naturally, my office is wallpapered with family photos, colorful Treasure Maps (aka vision boards) and cute puppies!

I’ve served as a volunteer Junior Achievement instructor and have taught students basic economic, personal finance and small business management concepts. The kids and their teacher loved the program. So did the parents — in fact, several of the student’s parents had their kids ask me pressing, personal finance questions for them. Yet the only administrators in my area interested in offering the course were those managing private schools. There is a pathetic 2.3% percent national market penetration at the high school level — and Junior Achievement classes are offered for free!

What about you: Did your parents pass along their financial literacy skills to you? Were you taught personal finance in school? Do you think schools should be required to teach money management skills? And finally, if the cure for financial illiteracy is so simple, then why aren’t we doing it?

I enjoy these posts – thanks for adding a voice of reason given the vast propensity to imagine the solution to the problem is doing more of the thing that caused the problem. We’ve collectively been telling ourselves the same stories so long it’s hard to ram home still that they *are* just stories; it’s good to keep hearing stuff like this to remind us. Like Anna, I’d love to read your thoughts on surviving the possibility of heightened inflation over the coming years – its impact on savings and so on. I know you suggested in a previous post you were concerned with this matter. Any thoughts?

Many fear hyperinflation, but after digging into the topic, I don’t think it’s as likely a scenario as prolonged deflation. From what I’ve been hearing, talk of hyperinflation might be driven more by politics than economics.

We are experiencing deflation right now. Using the 12-month change in the Consumer Price Index as the measure, inflation has been negative for three consecutive months. I think the more likely scenario will be like Japan: low inflation, low interest rates, and falling house prices for at least a couple more years.

… Japan, during what came to be known as its “lost decade.” A gigantic real-estate boom in the 1980’s came crashing down in 1991, bringing many other prices with it. Efforts to restart the economy foundered time and again, as businesses were not able to generate the kind of profits that would reignite prosperity’s cycle of hiring and spending. Not until 2005 was the deflationary era finally declared to be over. ~ New York Times

Because I’ve been sitting on a considerable sum of cash since I made my exit from the stock market during the first half of 2008, I’ve been mulling over this topic. I’m still trying to wrap my head around the implications of hyperinflation and prolonged deflation. I am not an economist, so please take my thoughts and opinions with a grain of salt. In other words, this post is not investment advice; just my best guess and opinion.

During deflation, debt is the enemy. Deflation is better for those with savings accounts because it increases the value of the money they have saved. Deflation rewards people like me (with cash) and retired seniors (who no longer need to worry about rising unemployment rates and would benefit from living cost containment).

During hyperinflation, the last place one wants to be is in cash. Inflation is better for those who owe money because it reduces the value of the money previously borrowed. Inflation is better for those in debt — including the US Government. So naturally, the Fed wants to create and maintain a moderate, steady rate of inflation.

Many people worry that the amount of money the Fed is spending to stimulate the economy will create hyperinflation. I think these fears are unfounded, at least for now. Last I heard, the Fed created about a trillion dollars, which sounds enormous, but is actually small when compared to the approximately $10 trillion drop in housing values and ~$10 trillion drop in stock market capitalization.

The Fed realizes they need to be careful — if they dilute the economy with too many dollars, they risk creating hyperinflation. Hyperinflation would be tough on everyone, including the Government, because foreigners would stop lending money to the US — unless they were sufficiently rewarded for taking on the heightened risk of investing in dollars.

Compensating foreign investors for taking on inflation risk means raising interest rates. But increasing interest rates would push homebuyers and homeowners with adjustable mortgages right over the edge. Mortgage rates have increased recently and if they keep increasing, we should see home prices fall further. Prices fall as interest rates rise, because a given monthly payment covers a smaller mortgage at a higher interest rate. Collapsing property values simply are not synonymous with hyperinflation.

For the short term, investment experts agree, deflation is more probable, with unemployment still climbing and the economy still mired in a recession. There’s talk of green shoots, but most everyone agrees that an earnest recovery is a long way off.

No one knows for sure what is more likely to occur: prolonged deflation or hyperinflation; or when the economy might change course. So how can we prepare for either scenario?

If you think hyperinflation is likely, you could invest in:

shorter-term fixed-income investments

TIPS (Treasury Inflation-Protected Securities)

foreign stocks and currency

real estate, REITS (real estate investment trusts)

commodities

precious metals

gold

During hyperinflation, the last place one wants to be is in cash.

If you think deflation is likely, you could:

raise and hoard your cash.

live below your means.

put off big purchases until prices drop more. You are, in essence, actively making money just by not losing it.

rent a home rather than own because home prices, like other hard assets, will continue to drop in value during deflationary times.

de-leverage yourself: pay off your credit debt as soon as possible — and don’t start building it up again. You don’t want your debt to expand at the same time dollars are becoming more valuable!

invest in dividend paying stocks. But it can be tricky to find a secure dividend paying stock in a deflationary environment.

play the currency market (certainly not my area of expertise).

play the short side using things like inverse index funds that move in the opposite direction of the market. Caution: While there are possibilities for making huge returns in this market, the rallies in a bear market can whomp you. Your timing must be precise.

build a CD ladder. The longer the duration the more risk there is, but at least your principal is protected.

invest in yourself and your education. Staying employed in such a downturn is the most important thing.

During deflation, debt is the enemy.

What am I doing? What do I plan to do?

Over the course of the past few years, I have positioned myself as best I can for the current economic deflation: I sold my home, paid off all of our debt, pulled out of equities and hoarded cash. Today I am in a wait-and-see holding pattern and once deflation is curbed, I am in a great position to change course accordingly: I have cash ready to buy the hard assets (when they are cheap) that will help me weather inflation.

What about you? Do you think prolonged deflation or looming hyperinflation is more likely? Why?

My question has to do with the timing of buying (a home), especially in the current market. I would like to know from your perspective when a time to buy might be. I’m not asking for you to predict a date, but rather I’m interested to know what indicators and trends you might look at to make a decision to buy a home. Any response you have is much appreciated!” ~Adam

(Ed Note: The following is a reprint of an analysis I wrote in April, 2008. My family and I have since moved into a different rental home so the numbers I used to illustrate these concepts would be different today. However, the concepts remain the same. I’ve also added an update after the conclusion of this post.)

Using three indicators and the home my family currently rents as an example, I’ll illustrate how I gauge whether (or when) the time might be “right” to buy a home.

The home I rent today might sell for $250,000. We pay $1,295 per month for rent. It is a single-family home located in Colorado with four bedrooms, three baths, a two car attached garage, a fenced yard and 2,120 square feet.

First “Price is Right” Indicator: The Price-to-Rent Ratio

Rents are a useful barometer for tracking housing markets. Like a P/E (price-to-earning) ratio for a stock, a P/R (price-to-rent) ratio can help identify relative real estate bargains. The lower the ratio the better. The current price-to-rent (P/R) ratio for my home is 16.09 ($250,000 price divided by $15,540 annual rent).

Therefore, the current P/R ratio on my home is 38.7% higher today than it was in 2000 (16.09 versus 11.6). If the P/R ratio for my home was to return to year 2000 “pre-bubble” levels, my home would sell for $153,250 today rather than $250,000. Therefore, unless I find a “bargain” – a foreclosure, short-sale or bank-owned property with a reasonable P/R ratio, I’ll probably wait until my local market returns to pre-bubble price-to-rent levels.

Second “Price is Right” Indicator: When will buying real estate make sense for landlords?

I recall times when local investors could buy a house with 20% down, rent it out at market rates, and make a positive cash flow in year one. In fact, I’ve done it before. But during the real estate bubble, investors speculated. They bought homes that created a negative cash flow, then counted on home appreciation to pay them back someday in the future. As with any investment, the more speculative, the more risky. I’d rather wait until I can buy rental investment homes that create positive cash flow from the get go. Future price appreciation would be icing on the cake.

My (speculative?) landlord bought our home in 2006, near the peak of the housing bubble. Here’s an estimate of the annual costs our landlord incurs on our home:

Obviously our landlord was betting on home price appreciation to continue at unprecedented rates. Bummer.

In order to break-even in year one, our landlord needs to increase our rent from $1,295 to $2,065 per month. Of course if he tried to do this, we’d move out, no one would move in, and his investment property would sit vacant. Not good! So he’s not likely to raise the rent.

Alternatively, if he had bought at the “right” price with the intent to create a near break-even cash flow in year one, he’d have paid only $130,000.

$130,000 is 48% less than the current value of $250,000! Ouch!

If our landlord had bought this home for $130,000, this is what the math might look like:

Item

Annual Cost

Notes

Down Payment

$1,040

20% of $130,000 = $26k down x4% in T-bill, CD or bond instead.

Mortgage Payment (P+I)

$7,680

$104k @ 6.25% 30 yr fixed

Property Taxes

$780

0.6% of hm value

Insurance

$900

Maintenance, Repairs

$2,331

15% gross annual rent (minimum)

Property Management Fees

$1,399

9% of gross annual rent (8-10% is typical)

Vacancies

$1,295

1 month per year allowance

Marketing and Leasing Fee (by Mngmt Co.)

$583

90% of 1 mo. rent every 2 yrs (80-100% is typical)

Auto Expense

$0

(assuming owner relies 100% on mngmt company)

Total Annual Cost

$16,008

+ $15,540 Annual Gross Rent Collected

– $16,008 Annual Costs

= $468 Annual LOSS (almost break-even)

Third “Price is Right” Indicator: An “old” rule of thumb for establishing fair value of rental property is to multiply the annual gross rent by 6 (in not-so-great neighborhoods) to 10 (in premium neighborhoods). This gives you a “business” estimate of the value of a rental. In my case:

Using the above indicators, the price of the home I’m renting should be between $130,000 and $155,400 — rather than the current $250,000. Significant price declines are needed to bring home prices back to their historical relationship to rents (and/or rents need to increase substantially) before the P/R ratio makes sense again.

June 2009 Update:

A year ago, we moved to a 3 bedroom, 2 bath condo. We pay $1150 per month in rent and this includes our water, sewer, trash, cable TV, yard maintenance, clubhouse, swimming pool, hot tub and exercise facility. These HOA benefits cost our landlord about $200 per month. Our landlord bought our condo for $177,100 in 2002. Therefore, our P/R (price to rent) ratio is just under 13 if you include the HOA benefits in our rent; or about 15.5 without them. The most recent comparable sales price I can find for a similar unit was $160,000 in March 2007. I don’t know what our condo would sell for today, but the price would need to drop to $132,240 for the P/R ratio to match our local 11.6 pre-bubble average.

We will continue to rent for as long as it is cheaper to do so. We enjoy our modern condo with all of it’s amenities and proximity to a huge park. This said, we ARE looking to buy land or a home eventually — but only if we can find one for the right price! We are in an enviable position — we can make a low price offer sound appealing to the right seller — because we don’t require a mortgage, we can pay cash if necessary, and we don’t have any home sale contingency to delay closing. When the time and price is right, we will find (or build) our little green dream home.

Readers: What indicator(s) are you watching to access real estate values? When do you think the market will hit bottom? Please do your own math for your own local market and leave your results in the comments for comparison and discussion.

More specifically, does the commonly given investing advice to “buy and hold” really work? Or have the rules changed?

During the past several decades, the prevailing advice has been something like this:

“Diversify your investments, buy stock in good companies, and hold them until you retire. The value of stocks (and real estate) always go up over time.”

Sure they do… until they don’t.

People who steadfastly held onto their stock portfolio from peak (10/9/07 DJIA at 14,164) to most recent trough (3/9/09 DJIA at 6,547) saw almost 54% of their portfolio vanish.

In just 17 months, over 12 YEARS of DJIA gain disappeared. (DJIA closed at 6528 on 11/26/96.)

Buy-and-hold investors would need to see a gain of more than 116% to bring their portfolio back to the 10/9/07 DJIA peak (14,164) from the latest DJIA valley (6,547).

Of course, those who diversified among various asset classes and markets will come up with different numbers, but this is a global recession. Diversification helps very little when everything is falling. There have been very few places to hide, much less make a profit.

It really bothered me to hear financial advisers and personal finance bloggers recommend people stay the course and hold onto their stocks — and even buy more — as prices were falling. While real estate and the markets generally do rise over the long term, that is not much consolation if your retirement is near. Buy-and-hold investing has put those who are retired, or are close to retirement, in a huge pickle because they don’t have time on their side to recoup such giant losses.

I’m lucky that I don’t buy into the buy-and-hold hype. I used to, though, and I paid the price. Remember, no one, not even your investment adviser, cares as much about your money than YOU do.

During the first six months of 2008, I incrementally moved most of our stock portfolio to the safety of FDIC-insured cash accounts, limiting our losses to less than half as much as the buy-and-hold-ers have suffered. I follow momentum trends in the market, and as the trends were heading downwards, I got out and headed for safety. Buy-and-hold investors use a passive strategy; I limit my losses by actively and systematically managing our portfolio. I invest to make money, not to sit back and watch as it all disappears.

Before the Great Recession, I was able to profit by keeping my portfolio 100% invested. This has been the first time I’ve ever held cash in our long-term portfolio. Up until this Great Recession, there were always some sectors and markets trending upwards, even as others were tanking. Momentum trend investing kept my money working for me, moving to the new market leaders as they emerged.

The investing strategy I use assigns a score to no-load mutual funds based on their 1, 3, 6 and 12 month returns. I will remain parked in cash until markets show consistent upward momentum trends, triggering the scoring system to indicate positive numbers again. Then I will move my cash incrementally and systematically into equities.

If you’ve made it this far into my article, kudos! I know that investing jargon can be hard to wrap your head around. To help explain — and review — how I choose to invest, in a fun, story kind of way, please read a reprint of an article I wrote on my old blog in March 2008, when I was in the process of moving out of equities and into cash:

How I Make Money Following the Herd: The Trend is My Friend

(photo by p.joran)

A couple of days ago (Ed: this would have been in March 2008), I ranted about the financial herd behavior that created the unsustainable housing market bubble. But today, I have a confession to make that might make me sound like a hypocrite. Allow me to explain by way of comparison with one of my previous hobbies.

When we lived on a small hobby farm, I participated in stock-dog herding trials. Did you ever see the movie, Babe? Yep, me and my faithful Border Collie moved a flock of sheep across fields, around fences, and into small pens. We often competed in shows to demonstrate our skill and teamwork.

As long as my dog and I kept the flock of sheep moving together as one unit, we could herd them anywhere. Their desire to stay together was intense. Though we never tried it, of course, we probably could have moved them straight off the edge of a cliff — as long as the flock did it together.

The investment strategy that I’ve been using for the last several years involves following the same “herd” that often drives me nuts. Yep, I purposely join the very same herd that creates unsustainable and irrational market bubbles.

But here’s the critical difference — I bail out of the herd when they start flinging themselves off the cliff.

At first glance, this might sound like market timing. And we know how difficult it is to time the market successfully. I don’t have the time nor desire to be a day-trader, either. So what is the difference between market timing and the investment strategy I use?

“Market timing is the strategy of making buy or sell decisions of financial assets (often stocks) by attempting to predict future market price movements.”

So I’m not a market-timer because I don’t aim to forecast the market. I look at what the market is doing, not what the market might do. I enter the market after a trend properly establishes itself. I jump on the trend and ride with it. (Baa… Baa… Baa!) If there is a persistent turn contrary to the trend, I follow a mathematical signal and exit that trend.

I’ll explain this by returning back to my sheep herding analogy:

I join the already formed flock after it’s developed direction and momentum. I follow the flock as it heads towards greener pastures. I watch the front of the flock. If the leaders of the flock start to stampede off a cliff, I bail out and take a different direction. I look for another forward-moving flock to follow.

I don’t think momentum investing is in vogue with the majority of individual investors. If I had to guess what is most popular, I’d say it’s the passive strategy of buy-and-holdindex investing. I am a previous buy-and-hold index fund investor myself. There is nothing “wrong” with this strategy. After all, the long-term trend (note the word “trend” again) of holding the total market is up. A buy-and-hold-index portfolio is easy to manage, enjoys low expenses, and often saves on taxes.

Every trader needs a trend to make money. If you think about it, no matter what the technique, if there is not a trend after you buy, then you will not be able to sell at higher prices…”Following” is the next part of the term. We use this word because trend followers always wait for the trend to shift first, then “follow” it.

Van K. Tharp, author of Trade Your Way to Financial Freedom

Momentum investing is different than buy-and-hold because it exploits investor herding behavior. As a previous shepherd, I intuitively understand this concept. Rather than buy-and-hold the total market through all of its peaks and valleys, I baa-baa-baa my way to the bank.

The ultimate goal of investing is often touted as buy low and sell high. Some would argue that today’s market provides an excellent time to buy while share prices are comparatively low; and that selling now could be locking in losses.

Conversely, by following a momentum strategy, I aim to buy as shares move up and sell them when even higher.

Richard Driehaus, the founder of Driehaus Capital Management, Inc., is widely considered the father of momentum investing. This Chicago money manager takes exception with the old stock market adage of buying low and selling high. According to him, “far more money is made buying high and selling at even higher prices.

Richard Farleigh, author of Taming the Lion, showed that markets continued in an existing direction around 55% of the time and reversed themselves the other 45%.

Similarly, Dal Company (NoLoad FundX) states that “Upgrading outperforms the market, as measured by the S&P 500, only about 55% of the time when measured on a monthly basis. But we end up far ahead in the long run because when we outperform, we do so by a larger measure than when we underperform.”

Now that might not sound like much, but for an investor 10pc represents a massive advantage. If you get 55pc of your calls right and manage your portfolio properly by riding winners and cutting losers you will make a lot of money.

So what does this mean for the investor? First, it argues against contrarian investing, which says you should look for opportunities where the market has overshot one way or the other. If prices move with the trend more than half the time, you start your search with an immediate handicap.

…stick with your winners. Trends go on for a lot longer than you might expect.

What does the “flock” indicate about today’s market conditions? How am I responding with my own investment portfolio?

In sheep herding terms: When a Border Collie puts too much pressure on the flock by moving too quickly or too erratically, the flock panics and sheep scatter everywhere. Sometimes individual sheep get hurt in the mayhem.

Investing: Wall Street shows the market swinging wildly up one day, wildly down the next, back and forth. Investors are feeling too much pressure. Panic is prevalent and money is scattering here, there and everywhere.

In sheep herding terms: When sheep scatter, the shepherd instructs the dog to stop dead in their tracks for a moment to allow the sheep to get over their panic and drift together to form an orderly flock once again.

Investing: Market trends have all but disappeared at the moment and little seems to “stick”. By halting my investing temporarily, I’m waiting for investors to stop their panicked scatter, calm down, and form identifiable trends once again.

In sheep herding terms: When the flock is calm and moving together again, the shepherd instructs the dog to get up and move forward.

Investing: When investors and the market have calmed down, stabilized, and show cohesive movement in identifiable sectors, I will resume my momentum investing by following the new market leaders.

How do I control risk?

I’m diversified. I invest in mutual funds and ETFs. I limit any one mutual fund or ETF holding to a maximum of 10% each (5% max. in more speculative sectors).

I’m systematic. I have predetermined entry and exit marks that help to keep me from reacting emotionally. I limit my upgrading to once or twice per month.

I cut my losses. During periods of high market volatility, I reduce my exposure to the market by cutting back on my positions. My objective is to preserve capital until more positive price trends reappear.

—

Disclaimer: My investment strategy and portfolio allocations are not right for everyone and should not be construed as advice. If you’re not sure how much risk to take, or whether your investments accurately reflect your life goals or appropriate timeframe, get some individualized help. Many 401(k) providers have investment professionals available to talk to participants about their allocations. Or consider talking with a fee-only financial planner. You can find one online at the web site of the National Association of Personal Financial Advisors, or the Garrett Planning Network, a group of advisors who charge by the hour.

With 13.2 million people currently unemployed in the United States, ABC’s television program, The View, aired a themed show this week on jobs: where to find one, how to get one, what to do if you become unemployed, job ideas for stay-at-home moms, and how to start a “job club”.

Because this is such a timely topic (everyone knows at least one person who has lost a job during this recession), I took notes to share with you. Please share this post with the people in your life who are needing some encouraging, constructive support right now. This post is LOADED with helpful links and resources!

Andrew Serwer, managing editor of Fortune magazine, reports that the lowest unemployment rates are in the farming and ranching industries, ranking states like Wyoming and South Dakota lowest in unemployment.

Ah, but you’re not a farmer or a cowboy? Serwer reports that the following industries are also fairing relatively well right now:

retail trade

health care

finance, insurance

professional and business services

state and local government

accommodations and food services

Jobs that should grow with the President’s stimulus programs include:

technology

education

What industries are NOT likely to be hiring now?

construction

manufacturing

mining

real estate

arts, entertainment

transportation

warehousing

utilities

Here are two specific companies that ARE hiring today:

Wal-Mart is opening 150 new stores across the country and is hiring store managers, human resource personnel, sales clerks, and more. They are willing to train people who have a strong work ethic.

2) Self-assessment: Re-evaluate what your strengths, interests and passions are and how you can best contribute to a company. Discuss your ideas with someone who is objective, such as an open-minded friend, a coach, or a counselor.

3) Update your resume: Customize it for each specific job that you are applying for. Keep it simple — filling your resume with irrelevant details is distracting. Highlight relevant experiences and describe your strengths using quantifiable verbs (“organized, saved”). Be specific about the results you have achieved and the contributions you have made to the business. Contact the people you intend to use as references. Only include those references you are confident will give you a favorable review.

4) Hire yourself as a headhunter: Treat FINDING a job AS a job, with a 9 to 5 structure. Establish daily and weekly goals. If you are rejected for a job position, ask the interviewer for feedback. Their feedback can help you improve your job hunting skills.

5) Network: Tell the people you know that you are looking for a new job. But phrase it in a positive way like, “I am looking for a career that will allow me to use my strengths to improve a business” rather than whining, “I lost my job. Do you know anyone who is hiring?” Stay in touch with colleagues (especially your previous manager) so you are on their mind if re-hire opportunities come up.

6) Get your mindset right: It isn’t just about thinking positively, it’s about acting positively. Tackle the things you’ve been putting off in other areas of your life. Act, feel productive, and your stress will be reduced.

7) Expand your skills: Finish your degree, apprentice, hone your strengths. This will make you more appealing to future employers.

8 ) Take a platform job: Go ahead a take a job that you are over-qualified for. Do what it takes to feed you and your family. Look at it not as a step down, but as an opportunity to network with new people while you continue to search for your ultimate job. Or wow your employer so much that they promote you.

9) Volunteer: Show future employers concrete activities you’ve performed during your lay-off that demonstrate initiative and skill-building. Be an awesome volunteer and you might impress someone at the organization so much that they will offer you a paying job. (Note: if you are receiving unemployment benefits, check to see whether volunteering impacts your eligibility.)

10) Start your business: Now that you have the time to investigate this option, utilize the many free resources available for those who are interested in starting a business.

I hope you find my notes and these resources helpful. Please leave additional ideas in the comment section below. For more money making and saving ideas, please head on over to the recent Carnival of Personal Finance!

I think it depends on what you believe got us into this economic crisis:

A) If you believe the crisis was caused by government incompetence, then all you need to do is move out of the country to find relief. (Oh yeah… but this is a global recession…)

B) If you believe it was the banks that got us into this mess and that fixing the credit crunch is going to fix the problem, then we should expect a full economic recovery in a few short weeks. Why? Because the government is throwing a ton of money at banks to loosen the flow of credit.

C) If you believe that consumer debt caused this problem, then we will have to wait for the housing and stock market bubbles to fully deflate, for our economy to reset to an affordable level, and for consumers to free themselves from their smothering burden of debt. Once these things play out, THEN consumers can AFFORD to spend again; THEN businesses can profit; THEN more jobs can be offered.